3. Materiales y métodos
3.2. Caracterización biofísica
Standard Chartered Bank offers other investment products under wealth
management & SCB is a pioneer in them. These can be other products that can be offered to investors but many investors are not aware of them. These products include:
Unit linked insurance plan (ULIP)
A unit linked insurance policy is one in which the customer is provided with a life insurance cover and the premium paid is invested in either debt or equity products or a combination of the two. In other words, it enables the buyer to secure some protection for his family in the event of his untimely Recommendation Recommended by SCB Recommended by Market Name of the fund HDFC Cash Management
Fund- Saving Plan
Principal Money Manager Fund-Regular-growth
Last 1 year % 8.2 Na
Last 3 years % 7.0 Na
Since Inception % 6.5 7.78
Expense Ratio % 0.58 Na
Sharpe 2.24 Na
Beta .15 Na
Treynor .3 Na
death and at the same time provides him an opportunity to earn a return on his premium paid. In the event of the insured person's untimely death, his nominees would normally receive an amount that is the higher of the sum assured (insurance cover) or the value of the units (investments).However, there are some schemes in which the policyholder receives the sum assured plus the value of the investments.
Every insurance company has four to five ULIPs with varying investment options, charges and conditions for withdrawals and surrender. Moreover, schemes have been tailored to suit different customer profiles and, in that sense, offer a great deal of choice. The advantage of ULIP is that since the investments are made for long periods, the chances of earning a decent return are high. Just as in the case of mutual funds, buyers who are risk averse can buy into debt schemes while those who have an appetite for risk can opt for balanced or equity schemes. However, the charges paid in these schemes in terms of the entry load, administrative fees, underwriting fees, buying and selling charges and asset management charges are fairly high and vary from insurer to insurer in the quantum as also in the manner in which they are charged.
Structured notes
A debt obligation that also contains an embedded derivative component with characteristics that adjust the security's risk/return profile. The return
performance of a structured note will track that of the underlying debt obligation and the derivative embedded within it. A structured note is a hybrid security that attempts to change its profile by including additional
modifying structures. A simple example would be a five-year bond tied together with an option contract for increasing the returns.
Arbitrage funds
Arbitrage is a strategy, which involves simultaneous purchase and sale of identical or equivalent instruments in two or more markets in order to benefit from a discrepancy in pricing. This strategy normally acts as a shield against market volatility as the buying and selling transactions offset each other. In an arbitrage transaction, returns are calculated as the difference between the futures price and cash price at the time of the transaction. Ideally the
positions are held till the expiry of the futures contract when the offsetting positions cancel each other and initial price difference is realized. This arbitrage strategy makes the fund immune to market volatility i.e. the fund will not be affected by market fluctuations. Since the portfolio of arbitrage funds is completely hedged at all times to lower the risk of loss/erosion of gains, it also in turn caps the returns that the fund could have clocked if the portfolio was not hedged i.e. these funds have a limited upside.
Despite the fact that arbitrage funds offer investors the opportunity to benefit from investments in equities by making use of derivatives, the fund cannot be compared to conventional diversified equity funds, especially on the returns parameter. The returns from arbitrage funds would typically be much lower than those of equity funds. That could be one reason why despite their equity holdings, arbitrage funds are benchmarked against indices like
CRISIL Liquid Fund Index for want of a more appropriate index.
Fixed income funds
An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity. Unlike a variable-income fund, where payments change based on some underlying measure such as short-term interest rates, the payments of a fixed-income security are known in advance. An example of a fixed-income security would be a 5% fixed-rate government bond where a $1,000 investment would result in an annual $50 payment until maturity when the investor would receive the $1,000 back.
Generally, these types of assets offer a lower return on investment because they guarantee income.
Portfolio management services(PMS)
Professional Investment Management Services are no longer the privilege of only large institutional investors. Portfolio Management Services (PMS) is one such service that is fast gaining eminence as an investment avenue of choice for High Net worth Investors l. PMS is a sophisticated investment vehicle that offers a range of specialized investment strategies to capitalize on opportunities in the market. The Portfolio Management Service combined with competent fund management, dedicated research and technology,
ensures a rewarding experience for its clients.
Most portfolio managers allow you to choose between a fixed and a
performance-linked management fee. If you opt for the fixed fee, you may pay between 2-2.5 per cent of portfolio value; this is usually calculated on a weighted average basis. The structure for the performance-linked fee differs across players; usually, this includes a flat fee of 0.5-1.5 per cent. The
portfolio manager also gets to share a percentage of your profit — usually 15-20 per cent — earned over and above a threshold level, which may range between 8 per cent and 15 per cent. Apart from management fees, separate charges will be levied towards brokerage, custodial services and towards meeting tax payments.
However, a PMS may only add significant value in the following cases:
Equity bias: Portfolio management services may be ideal for a person who seeks a substantial investment in the stock markets. An equity portfolio also offers greater scope for a manager to add value than does a debt portfolio.
Several of the established players in the PMS business focus on equity investments, though some also offer hybrid products.
Large surplus to invest: The minimum portfolio size that portfolio
managers accept for a customized portfolio ranges from Rs 25 lakh to Rs 5 crore.
Real estate Funds
An REMF is like a mutual fund for real estate assets. In other words the asset management company (AMC) invests in a range of real estate assets around the country and creates a fund based on those assets. Investors can buy shares in those funds which are traded on a daily basis on stock exchanges.
The value of the shares depends on the value of the underlying real estate assets.
REMFs have many advantages over direct investment in real estate.
• It allows investors to invest according to their income and financial circumstances.
• The portfolio of real estate assets will be a lot more diversified than a single home with assets ranging from office space to residential
properties all around the country as well as securities based on the real estate sector.
• Investors don't have to deal with the legal and maintenance hassles of owning property and can instead rely on the professional expertise of the AMCs. Finally if they need quick money, these funds are liquid assets which can be sold conveniently and rapidly.
RECOMMENDATIONS
• Savings Objective of Individual Investors
Savings Objective of the majority of Individual Investors is ‘to invest in moderate risk ’, thus throwing light on the nature of risk averse investors. AMC can attract a pool of investors by designing products for Risk-Averse investors.
But there is also a pool of investors that are ready to take high risk. Nearly 30% of the investors are ready to take high risk as they want high returns. These investors can be of high potential for equity based funds.
• Savings instrument preference among individual investors
Now only 11% investors invest in secured investments like bond & fixed deposits.
Now they prefer mutual funds over other investments. Around 23% of investors invest in equity. This group shows the highest risk appetite and thus shows a huge potential
Around 25% of the investors invest in gold. This is the second most preferred investment tool next to mutual funds. It also shows a huge potential as now gold
ETF are available. And the increase in gold price & thus increase in gold ETF is very much evident.
• Investment expenditure Ratio
Maximum investors show their expenditure ratio of 20-80%. But still around 25%
of investors have income-expenditure ratio of less than 20%. Thus it shows that still many investors are not investing properly & thus they need professional investment services.
• Stability of income
Around 60% investors have a stable income source. Earlier they had a psychology of investing in stable investment instruments like bonds & fixed deposits rather than investing in equity market where returns can be much higher than present investments but they use to show risk aversion because of the equity market’s volatility. Based on this it can be said that they did not believe in the economical condition of the country and market stability. But now conditions have changed.
People with stable income are also ready to take risk. More people are ready to explore new investment avenues. They are ready to invest in various types of investment.
• Investment advice
Around 70% of the investors do not take investment advice. They do investments on their own. This shows that investors have become more educated. They have more know- how of the market. But this can also be taken as a potential. Because, still there are investors who need advice. Standard Chartered Bank should target such investors.
Around 25% of the investors make investments after consultation with their peer group or financial advisors. Still around 75% of the investors make investment decisions on their own by making return analysis or market research.
• Preferential Feature in mutual funds among individual investors
The study shows the investors’ need for ‘Good Return’ is highest among features, followed by Safety, Liquidity, Tax Benefit, Capital Appreciation, Professional Management and Diversification Benefits.
• Reason for choosing a mutual fund
The most preferred reason for choosing the mutual fund is the past returns. Around 65% of the investors choose a mutual fund on the basis of past performance. Thus
SCB should offer more of those mutual funds that have good track record. Next most preferred feature is the brand name. In case of an NFO brand name plays an important role.
• Investment strategy
Around 64% of the investors have long term investment strategy. They want to invest for longer period. For such investors SCB can offer more of equity funds. As though the market is volatile now but it is going to give huge returns in 3 to 4 years.
As these investors are ready to wait they can be of huge potential.
• Preference of Mutual Fund Investing Over Equity Investing
The emergence of an array of savings and investment options and the dramatic increase in the popularity of Mutual Funds, in the recent years in India, has opened up an entirely new area for value creation and management. A house-holder
investor with few rupees left over after paying for housing and two wheeler installments, is puzzled as to where he must park his funds safely, given the volatility of the market. This category may include people who either have a low awareness level about MF industry or still do not completely believe that MFs can get the same return like that of Equity shares. Around 75% of the investors say that investing in mutual funds, risk ranges from low to medium. This shows that
sentiments of investors have changed towards mutual funds
• Sentiments towards market
Around 75% of investors believe that the market will recovers again. This shows a positive sign for mutual funds. So investors can be offered long term investments which can give returns.
Around 25% of investors believe that market won’t recover. For such investors gilt funds and money market funds can be offered
• Future strategy of investors
Around 60% of investors want to play safe. With current market volatility they want to wait and watch. Around 30% of the investors are looking at this as an opportunity to invest more in mutual funds as mutual funds are available at lower NAVs. This can prove to be a good potential customer base for SCB
REFERENCES
• www.mutualfundsindia.com
• www.google.com
• www.amfiindia.com
• www.nseindia.com
• www.investopedia.com
• www.moneycontrol.com
• www.wikipedia.com
• www.bseindia.com
• www.standardchartered.in.com
• The Economics Times
• Jeffery Lawrence, (2005), “Leading the Way”
• Study material “Standard Chartered Bank” , (2006), “Group code of Conduct-Leading by Examples”
• Study material “5Cs sales process”, “Standard Chartered Bank”
• ICFAI Press, “Mutual Funds”, (2004)
• “Mutual Funds Handbook”, (2004), Invest India Economic Foundation Private Limited.
QUESTIONNAIRE
2) Which investment tool, generally you choose for your investment purpose. (can tick more than one)
• Bonds
3) Before making an investment decision, how do you
conclude that for which investment instrument you should go for?
• According to return analysis
• According to esteemed group (one’s intra circle, which is relied by you)
• After consultation with your financial adviser
• According to market trend.
4) What is your investment expenditure ratio?
• Less than 20% • 20 – 80%
• 30 – 70% • 40 – 60%
• 50 – 50%
5) If you have to invest Rs 100, how will you divide it in the following categories?
• Long term (5-6 years)/ Capital appreciation
• Mid Term (2-3 years)/ Growth appreciation
• Short Term (monthly)/ Liquidity
6) If you have to invest Rs. 100, how will you divide it in the
---7) What is your investment objective, while investing in mutual funds?
8) What are the factors that you keep in mind before investing in mutual funds?
9) Do you generally invest in popular mutual funds or analyze the funds & performance before investment decisions?
• Follow the popularity
• Follow the esteemed group
• Careful analysis of the fund
• After consultation with financial advisor.
10) What is your investment strategy?
• Low risk, low return
• Moderate risk, moderate return
• High risk, high return
11) What is your view about the stock market?
• It will decrease further
• This is the bottom
• It will decrease further but then will recover
• It will recover now
12) As the market is going down, what is your investment strategy?
• Selling off existing funds
• Wait &watch
• Buying more funds as this is the right time to purchase
13) With current scenario, how risky do you find investing in mutual funds?
• Low risk
• Medium risk
• High risk
• Very high risk
14) How stable is your income source
• Stable
• Unstable • Moderate
• Fluctuating 15) Which bank is providing u the investment services?
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---Thank You for filling the questionnaire